Correlation Between Blackrock Value and Ariel Fund

Can any of the company-specific risk be diversified away by investing in both Blackrock Value and Ariel Fund at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Blackrock Value and Ariel Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackrock Value Opps and Ariel Fund Investor, you can compare the effects of market volatilities on Blackrock Value and Ariel Fund and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Blackrock Value with a short position of Ariel Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Value and Ariel Fund.

Diversification Opportunities for Blackrock Value and Ariel Fund

0.82

Correlation Coefficient

Blackrock Value  Ariel Fund

Very poor diversification

The 3 months correlation between Blackrock and Ariel is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Value Opps and Ariel Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ariel Fund Investor and Blackrock Value is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Blackrock Value Opps are associated (or correlated) with Ariel Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ariel Fund Investor has no effect on the direction of Blackrock Value i.e., Blackrock Value and Ariel Fund go up and down completely randomly.

Pair Corralation between Blackrock Value and Ariel Fund

Assuming the 90 days horizon Blackrock Value Opps is expected to generate 0.74 times more return on investment than Ariel Fund. However, Blackrock Value Opps is 1.35 times less risky than Ariel Fund. It trades about 0.01 of its potential returns per unit of risk. Ariel Fund Investor is currently generating about -0.04 per unit of risk. If you would invest  2,946  in Blackrock Value Opps on October 5, 2024 and sell it today you would earn a total of  6.00  from holding Blackrock Value Opps or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Blackrock Value Opps  vs.  Ariel Fund Investor

Blackrock Value Opps

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Value Opps has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ariel Fund Investor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ariel Fund Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Ariel Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Value and Ariel Fund

The main advantage of trading using opposite Blackrock Value and Ariel Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Value position performs unexpectedly, Ariel Fund can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ariel Fund will offset losses from the drop in Ariel Fund's long position.

The idea behind Blackrock Value Opps and Ariel Fund Investor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.